Micro-processes of public good social innovation in the Australian social impact investment market

Social impact bonds (SIBs) are strategic alliances aiming to generate financial profit through social innovation in the delivery of public social services. SIBs are also a product on the social impact investment market. There is little evidence for SIBs' effectiveness, and their ongoing international popularity partly rests on a theoretical premise that market mechanisms can effectively generate and diffuse social innovation. However, the literature contains no empirical consideration of whether and how this premise applies to public good social innovations. Our empirical study fills this gap by finding that public good social innovations are stimulated by market mechanisms, and markets are in turn shaped by these innovations. Despite this, public good social innovations eventually break away from markets in a micro-process we term ‘schisming’. Through describing how and why schisming occurs, we make a unique contribution to existing knowledge of the micro-processes of concerned market shaping, and the extent to which economic markets and a concerned society are embedded within each other. Implications for practitioners seeking to bridge social innovation and economic markets include the need to be cognisant of how contextual, socially constructed concerns affect the potential and process of diffusing social innovations.